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Schools and libraries could soon be connected to faster and higher-capacity broadband service through the federal E-Rate program under new rules that the Federal Communications Commission officially began preparing July 19.

Once finalized, the rules could profoundly affect digital learning for the nation's young people, as most internet connections to schools and libraries are so slow as to render most educational web sites unusable.

Mignon Clyburn, the acting chairwoman of the FCC, said the 3-0 vote by the agency to start writing the rules comes at a “pivotal moment.”

“Today…we launch a modernization of E-Rate that the times demand and our children deserve,” Clyburn said.

The move by the FCC follows President Obama's call in June to overhaul and expand the $2.25 billion-a-year subsidy program to connect America's public school students to the web at speeds of 100 megabits per second with a “target” of 1 gigabit per second--a speed that is 60 to 100 times faster than most schools or homes now receive--within five years.

Since 1996, the FCC-administered E-Rate program has provided discounts for both telecommunications and basic internet services at schools and libraries, but increasingly has been seen as inadequate to meet the needs of teachers and students. Though 92 percent of classrooms now have web access, up from 14 percent when the subsidy program started 17 years ago, the current fund size was last set in 1998, when .03 percent of American households had internet access at any speed faster than dial-up. According to a recent survey conducted by the commission, 80 percent of school and library administrators believe their broadband internet connections simply do not meet their current bandwidth needs.

“The time for E-Rate reform is now,” said Margaret Spellings, co-chair of the Leading Education by Advancing Digital, or LEAD, commission, in addressing the FCC prior to the agency's vote. “Five years from now, it will be too late.”

Spending Increases May Be Last Resort

In launching what has been termed the “ConnectED” initiative in June, President Obama recommended updating the E-Rate program even if it means increasing the fees that for years had been added to consumers' monthly telephone bills.

But the FCC, in taking the first formal step in the lengthy process of approving new rules, has elected to first seek comment from the public on new ways to prioritize and “more equitably distribute” funding.

The commission also is looking to cut wasteful spending in the overall Universal Service Fund where possible.

The FCC is on target to save $400 million this year following efforts to trim the federal Lifeline fund, one of the four Universal Service Fund programs, which was created to help subsidize the cost of telephone service for poor Americans. The FCC in February 2012 approved a number of changes to that program, including limiting the $10 monthly subsidy to one phone line per home, requiring proof of income eligibility from new subscribers, and creating a national database to prevent duplicative subsidies. These and other reforms helped the FCC cut $214 million in spending in 2012 alone, the agency has said.

Just as with Lifeline, the FCC will try to make more programmatic changes.

Every year, telephone consumers contribute $2.25 billion toward the E-Rate program, bur the FCC has only disbursed an average of about $1.83 billion in each of the last ten years. One of the reasons for this is the complex application filing process, which takes months, and the fund distribution process, which can take years.

“If we simplify the program and focus on the right priorities, we can do a lot more with the money we are already collecting.”

FCC Commissioner Aji Pai

Another contributor is the eligibility criteria. Under the current rules, all schools receive discounts for what are known as “priority one” services, such as phone service and basic internet access service to a school building, while only a select category of needy schools are eligible for discounts for “priority two” services, such as connecting particular classrooms to the internet. Typically, only applicants with the highest eligible discounts--those with the greatest income needs--can get any priority two funding.

Aji Pai, the senior Republican commissioner who two days before the FCC's vote laid out a four-point plan for updating the E-Rate fund, said the agency must first address the “red-tape funding gap.”

“Each year, we have hundreds of millions of dollars available for the E-Rate program that we aren't spending--over $800 million last year alone,” Pai said. “…And we're spending hundreds of millions of dollars on outdated services. If we simplify the program and focus on the right priorities, we can do a lot more with the money we are already collecting.”

Pai, already showing resistance to growing the size of the fund, noted that the Universal Service Fund “contribution factor” has increased from 9.5 percent to 15.1 percent in just the last four-and-half years.

“We cannot ask American consumers to bear an even heavier burden when they pay their monthly phone bills, especially when well-considered structural reforms would obviate the need for us to pose the question,” Pai said.

As drafted, the FCC's NPRM will not propose either a specific funding cap or a specific percentage increase to the fund, but rather seek comment on ways to encourage “smarter spending,” including through consortium purchasing, which could yield greater discounts for schools and libraries.

Addressing Pai's recommendation about E-Rate administrative problems, the document will further solicit comment on how best to streamline the application process and “simplify” the list of services eligible for support, FCC staff said.

1 Gig by 2020 a Tall Order

As far as timelines, the FCC is proposing that by the 2015 school year, every school should have access to a 100 megabits per 1,000 students; by 2020, 1 gigabit per 1,000 students--goals first proposed by Democratic FCC Commissioner Jessica Rosenworcel in a speech delivered at the Washington Education Technology Policy Summit in April.

“To get to these goals, we need to take a hard look at the existing program,” Rosenworcel said. “We need to collect better data from each of our applicants about what capacity they have and what capacity they need. Then I think we can make adjustments to how we prioritize funding to ensure that schools shorter on capacity get greater access to support.”

In undertaking this review, the FCC should phase down an estimated $600 million currently being spent on outdated services, like paging, and re-appropriate those funds for more high-capacity broadband services, Rosenworcel said.

“But growing this program is about growing national infrastructure and enhancing educational opportunity for the next generation,” she added. “It is a conversation we need to have, because it is where we need to invest now.”

During a press conference following the FCC's press conference July 19, Clyburn declined to commit to any of proposed benchmarks or goals, including Obama's, saying only that the agency will consider all ideas and suggestions.

Broader USF Reform in Progress

The FCC is in the process of reforming not only the E-Rate fund, but the Lifeline, Rural Heathcare, and High Cost funds as well.

In October 2011, the FCC voted to transform the $4.5 billion-a-year High Cost fund from one that subsidizes the cost of providing telephone service in rural areas to one that subsidizes broadband internet service in those same areas. That fund has now been renamed the Connect America Fund. Despite this historic action, the FCC left unanswered the question of who will pay to support the fund. Since 1997, the FCC, with congressional approval, has required telecommunications companies to contribute a percentage of their long-distance revenues to the Universal Service Fund. That money is largely passed on to consumers in the form of monthly surcharges. The basic question now before the agency is whether internet service providers and even internet companies, like Google and Facebook, should have to contribute to the new universal service pool.

Timing for Final Action Uncertain

FCC staff told reporters that the NPRM does not contain any concrete proposals about either contribution increases or contributor pools.

“There are a lot of ideas in this item,” said Trent Harkrader, associate chief of the FCC's Wireless Competition Bureau.

Asked about timing, Harkrader said “we feel the urgency of this,” but did not say when the commission might finalize the rules.

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